HSA Advantages
Health Savings Accounts were created in response to rising health care costs. Congress passed this legislation intending to provide financial incentives for employers and the self-employed to acquire health insurance coverage. The legislation also encourages consumers to take more responsibility with their personal healthcare spending.
Heath Savings Accounts permit employees to keep any contributions made on their behalf, even if they change employment. And, unlike “cafeteria plans”, which also provide benefits for non-covered medical expenses, HSA assets can’t be lost if they aren’t used within a one year time frame.
Advantage Quick List:
1. Contributions are 100% tax deductible.
2. Interest or other earnings on the assets are tax free and tax deferred on any growth.
3. Money saved can be used for qualified medical expenses tax free for life (see IRS Publication 502).
4. HSA funds can also be used to pay COBRA or other medical insurance premiums during periods of unemployment or temporary layoff.
5. Contributions remain in your HSA until you use them. At age 65, unused HSA money can be withdrawn for non-medical expenses without penalty. (Similar to an IRA, ordinary income tax will be charged on the money withdrawn for non-medical reasons.)
